Socialism was a specific philosophy of
government ownership of the means of production.
The democratic welfare state was never a variety of
socialism. Marx, the most famous socialist, despised democracy. He despised all
attempts at economic amelioration through legislation. He wanted a proletarian
revolution. He preached -- the correct verb -- a religion of revolution. That
was the thesis of my first book, Marx's Religion of Revolution (1968).
You can download it here.
He was silent about how the state would allocate
resources under his system. He published nothing about the actual operations of
the post-revolutionary society, socialism, and its final successor, communism.
Late in his career, in his final major publication, little more than a
pamphlet, he wrote this: "Between capitalist and communist society there
lies the period of the revolutionary transformation of the one into the other.
Corresponding to this is also a political transition period in which the state
can be nothing but the revolutionary dictatorship of the proletariat."
(Critique of the Gotha Program, Pt. IV, 1875) This was a purely
political focus. He was silent throughout his career about how the state should
or will or can run the economy.
He provided some famous slogans. He offered rhetoric
about the inevitable triumph of the proletarian class. But he offered no
guidelines for the leaders of the victorious proletarians.
Socialists in the nineteenth century were equally silent
about how the state can allocate production so as to create the good society.
In the twentieth century, there was no major detailed theoretical treatise on
the economics of socialism that went into detail about the actual operations of
central planning agencies in a world where the state owned the means of
production. There was no equivalent of Ludwig von Mises' Human
Action or Murray Rothbard's Man, Economy, and State or George Reisman's
Capitalism.
In retrospect, this seems incredible. Here was a movement
that captured the Soviet Union and China. Yet there was not a single book, let
alone a shelf of books, available to Lenin in 1917 and Mao in 1949 that could
serve as a guide to the kind of economic organization that they should impose.
There was no treatise that could serve as a blueprint for the socialist New
World Order, whether non-revolutionary socialism or Marxist communism. Yet Marx
said that his was scientific socialism -- not utopian socialism, like the works
of his critics.
Utopia meant "nowhere." They were all utopian
socialists, including Marx.
Socialism has always been a movement based mostly on
rhetoric. There was never any logic to it. There were endless promises about
how politics or class revolution could bring in a socialist paradise, but there
was nothing written about how this paradise would operate.
Marx offered his famous ten
steps in The Communist Manifesto (1848), but they were mere
slogans. The fact that he included a central bank (#5) is indicative of how
confused he was about the transition from capitalism to socialism to communism.
He never went into any further detail. He had plenty of time to offer details.
He died in 1883.
Here is what defenders of socialism refuse to face: there
is no theory of socialist economic planning. Socialist economic theory has
always been missing in action. There is also no practical treatise that has
served as a guide for socialist economic planners after their national
revolutions. Socialist economic planning has been chaotic. No theory of
socialist planning ever emerged from this chaos.
When we look at the history of socialism, meaning the
state ownership of the means of production, there are few examples. The USSR
and Communist China did come close, but the black markets always operated in
both societies. There have been tiny Communist states: Albania, Cuba, and North
Korea. None have produced a theory of socialist planning.
The Labor government of Great Britain from 1945 to 1951
nationalized coal mining and much of medical care, but it did not extend
control over the capital markets of The City, the separate legal jurisdiction of
the bankers in the center of London. The Bank of England maintained most of its
sovereignty. Labor nationalized it in 1946, but then failed to exercise
control. It remained Keynesian.
In short, there are no working models of socialism. This
is fitting because there are no theoretical models of socialism. It has always
been based on rhetoric, not logic. It has never been based on any system of
economic causation. It has no theory of economic sanctions comparable to the
sanctions in the free market of monetary profit and loss.
This was pointed out in 1920 by Mises in his classic
essay, "Economic
Calculation in the Socialist Commonwealth." He argued that
socialism is inherently irrational in theory. It has no system of private
property. It, therefore, has no capital markets. But without capital markets,
there can be no prices for capital. Without prices for capital, central
planners do not know how to allocate capital to serve the wants of the people.
So, he argued, pure socialism cannot survive.
This argument was never successfully refuted by any
socialist. Polish immigrant and University of Chicago Professor Oskar Lange
wrote several articles in the late 1930's on Mises' arguments, but they were
strictly theoretical. When he went back to Communist Poland in 1945, and was
later put into positions of authority in planning bureaus, nothing that he had
written in his famous essays was actually implemented by the Polish government.
His hypothetical socialist planning board always remained pure theory. It was
based on the idea that central planners can do trial and error pricing to
allocate capital. But there are no consumer-generated prices in a socialist
commonwealth. More to the point, there were no economic sanctions attached to
them. If there is no system of monetary profit and loss, there are no
meaningful economic sanctions placed on the planners. But there are surely
political sanctions, as the planners discovered under Stalin and Mao. It wasn't
that the dictators liquidated capital. It was that they liquidated political
opponents and bureaucrats who lost their favor.
There have been very few Marxist economists teaching in
American universities. They have had zero influence on the profession. There
have hardly been many more socialist economists on the campus. There was a
flurry of publicity in the late 1960's regarding a tiny group of these people,
who call themselves the Union of Radical Political Economists. It had the
unfortunate acronym of URPE, which was pronounced "urpee." I studied
under one of its major figures in grad school, Howard Sherman. He lectured
coherently. He wrote in English. He did not use equations. He never presented
the case for socialism in the classroom that I attended. If he converted
anybody to socialism, it must have been in private.
The socialist professors are confined mainly to the
sociology departments and the English departments. These people have never
taken an economics course. They do not comprehend the logic of economic
causation. Like their predecessors in the nineteenth century, they confine
their comments to rhetoric.
We see crowds of undergraduates who claim to be in favor
of socialism. But none of these people has ever read a book on socialist
economic theory. This is understandable since there isn't one.
They are motivated by rhetoric. Rhetoric is all they have
been exposed to. They go to large mass meetings to protest this or that aspect
of capitalism. But they have no agendas. They don't have a personal agenda, and
they don't have a social agenda. In this sense, they are just like Karl Marx.
The difference is this: they are not going to find sugar
daddies like Frederick Engels, who ran his family's textile plant in Manchester
and used a little of his money to put Marx on the dole for four decades.
These people are noisy, but in terms of pursuing a
systematic agenda for turning the United States into a socialist commonwealth,
they really are harmless.
When Deng Xiaoping inaugurated an agricultural reform in
1979 which relied heavily on private ownership, he launched the most impressive
period of economic growth that any large country has ever experienced. But that
ended socialist economic planning. When, on December 25, 1991, Mikhail
Gorbachev announced that the Soviet Union was going out of business, that ended
the lure of socialism among the intellectuals. They had always clung to
socialism because they expected that their class would exercise power in a
socialist regime. When it became clear that the Soviet Union was too feeble to
impose its will on the Russian masses, that was the end of their infatuation
with Communism and socialism. It was always about power. It was never about the
logic of socialism.
So, in this month, the 100th anniversary of Lenin's
Bolshevik revolution in Russia, we can rejoice in the fact that socialism is
dead. From a theoretical standpoint, it was never alive. It was a corpse from
day one. It was sustained by rhetoric, not logic.
If you want to visualize the future of socialism, think
of Lenin's corpse in Lenin Square. It's all dressed up with nowhere to go.
